CMHC Reports January 2020 Housing Starts

House under constructionThe pace of housing starts climbed in January from a month earlier on gains in Ontario and Quebec while starts declined in Western Canada, said Canada Mortgage and Housing Corp. On February 10th, the federal housing agency said that January saw a seasonally adjusted annual rate of 213,224 units started, up 8.8% from the 195,892 starts in December. Of those, rural starts were estimated at a seasonally adjusted annual rate of 10,817 units.

Gains were concentrated in multi-family buildings like apartments and condos that saw a 13.2% increase in starts, while single-detached home starts slipped 2.1% to 55,100 units. Economists had expected an annualized rate of 205,000 units, according to financial markets data firm Refinitiv.

Construction activity gains reflected regional economic strengths, but analysts noted that weather may have played an outsized role at this time of year. TD Economist Rishi Sondhi said in a note that, “milder-than-normal weather conditions in Central Canada likely boosted construction in Ontario and Quebec while inclement weather probably dragged down activity in B.C. and parts of the Atlantic Region.”

Sondhi also noted that, “the nice upside surprise in homebuilding also speaks to supportive fundamentals, including sharply rising home prices, low interest rates, robust population growth, low rental vacancy rates in key markets and programs to incent rental construction.”

Quebec saw a big jump of 41,000 units to 77,000 to reach the second highest level for the province since the 1990s, while Ontario saw gains of 12,400 to what Sondhi said was a “relatively low” level of 69,500 units. Out west, Alberta saw a drop of 16,900 to 22,700, and B.C. dropped 16,600 to 26,200 units.

Weather variances aside, the market showed strong underpinnings that could lead the Bank of Canada to hold off on a rate cut, said BMO senior economist Jennifer Lee in a note. “Strong immigration and still-low rates continue to support Canadian housing. Despite the usual month-to-month volatility, starts remain solid and a reason why the BoC may be hesitant to cut rates.”

The longer-term trend looked stable, said CMHC, as the six-month moving average of the monthly seasonally adjusted annual rates of housing starts edged down to 210,915 in January compared with 212,212 in December.

Source: Canadian Press

Building Permits infographicStatsCan Reports December 2019 Building Permits
The total value of building permits issued by Canadian municipalities increased 7.4% to $8.7 billion in December. Increases were reported in five provinces, led by Ontario (+10.5% to $3.4 billion) and Quebec (+15.8% to $2.2 billion). For 2019 overall, municipalities issued $102.4 billion worth of permits, up 2.6% compared with 2018.

Value of residential permits up
The total value of permits for multi-family dwellings was up 15.9% to $2.9 billion in December, mostly due to large projects in the census metropolitan areas (CMAs) of Montréal and Vancouver. Conversely, the total value of permits for single-family dwellings decreased 3.2% to $2.2 billion, with the largest decline in Ontario (-$76 million).

Increase in the value of commercial and institutional permits
The value of commercial permits rose 19.7% to $2.0 billion in December, largely due to plans for the multi-use commercial development, “Royalmount”, in the CMA of Montréal.

Meanwhile, the value of institutional permits rose to its highest level since September 2017 (+10.8% to $1.0 billion), largely due to permits for the redevelopment of the Centre for Addiction and Mental Health in Toronto. The total value of industrial permits declined 21.0% to $583 million following strong gains in November.

Annual review 2019
In 2019, municipalities issued $102.4 billion worth of permits, up 2.6% compared with 2018. Gains were reported in six provinces, with the largest increase in Ontario (+$2.8 billion). Alberta recorded the largest decrease (-$1.8 billion), with declines in all building types.

The value of permits in the CMA of Toronto increased 1.9% to $19.2 billion, while several other Ontario CMAs also reported notable gains. The CMA of Kitchener–Cambridge–Waterloo posted the largest increase in the country (+53.5% to $2.2 billion), largely due to an increase in the value of permits for multi-family dwellings.

The Edmonton CMA reported the largest decrease in the total value of building permits (-21.5% to $3.9 billion), accounting for more than half of the overall decline in Alberta. This was the fifth consecutive annual decrease in the CMA of Edmonton, reflecting the challenging economic environment in the province.

Building intentions in the non-residential sector increased 9.4% to $40.4 billion, with gains in seven provinces. All components reported increases, led by commercial permits (+7.5% to $23.2 billion).

Conversely, the value of permits in the residential sector declined 1.3% to $62.0 billion. The value of permits for single-family dwellings fell 4.9% to $26.5 billion, its lowest level since 2009. Permits for multi-family dwellings offset some of this decline, rising 1.5% to a record $35.5 billion.

Source: Statistics Canada